01.26.11

Leahy Lauds Government’s Fraud Recovery Efforts To Protect Taxpayer Dollars

WASHINGTON (Wednesday, Jan. 26, 2011) – Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) praised law enforcement’s efforts to recover billions of taxpayer dollars lost to fraud during a hearing Wednesday morning on Capitol Hill.  Leahy focused the first Committee hearing of the 112th Congress on fraud enforcement and recovery efforts, which have collected billions of dollars from penalties and fines in the last fiscal year alone.

“Major fraud cases take time to investigate and prosecute,” said Leahy.  “The renewed push we have seen from this administration and from Congress will continue to yield significant results.  But we must continue to give law enforcement agencies the tools and resources necessary to root out fraud so that they can continue to recoup the loss to taxpayers.  Americans deserve to know that their Government is doing all it can to hold responsible those who committed fraud, and to prevent future fraud, particularly with so much taxpayer money at risk.”

Two senior Department of Justice Officials, Assistant Attorney General Lanny Breuer of the Criminal Division and Assistant Attorney General Tony West of the Civil Division, testified about the government’s recovery of more than $6 billion through fines, penalties and recoveries in fraud cases in the last fiscal year, including $4 billion in health care fraud cases.  Breuer and West also testified about the significant number of convictions and prison sentences the Department has secured against those who commit fraud.

“This prison time is critical as a deterrent,” said Leahy.  “Fines and monetary penalties alone fall short in protecting the public.  Too often, those who are willing to commit fraud view monetary penalties as just the cost of doing business.  This focus on ensuring real prison sentences must continue.”

In the last Congress, Leahy partnered with incoming Judiciary Committee Ranking Member Chuck Grassley (R-Iowa) to author the Fraud Enforcement and Recovery Act (FERA), which strengthened tools and increased resources available to federal prosecutors to find, prosecute and jail those who commit financial fraud.  The bill was among the first signed into law by President Obama in 2009.  Leahy and Grassley also worked together on anti-fraud provisions that were included in the Affordable Care Act and the Wall Street Reform Act.

Earlier this month, Leahy announced that fraud-fighting initiatives will be a priority of the Senate Judiciary Committee in the 112th Congress. 

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Statement Of Senator Patrick Leahy (D-Vt.),

Chairman, Senate Judiciary Committee

“Protecting American Taxpayers: Significant Accomplishments And Ongoing Challenges In The Fight Against Fraud”

January 26, 2011

 

Today, in the Senate Judiciary Committee’s first hearing of this new Congress, we consider a vital issue on which Senator Grassley and I have worked together with great success -- the fight against fraud.  Last Congress, one of the first major bills the Senate Judiciary Committee considered, and one of the first bills the President signed into law, was the Leahy-Grassley Fraud Enforcement and Recovery Act.  That bill gave fraud investigators and prosecutors needed tools and resources to better hold those who commit fraud accountable and to recover taxpayer money.

Working together, we also strengthened the False Claims Act, which empowers whistleblowers to find fraud and recover stolen tax dollars that would otherwise go undiscovered.  We worked on key provisions to fight fraud in the Affordable Care Act and the Wall Street Reform Act.  These new laws are already paying off, and I look forward to working with Senator Grassley, and with other Senators from both sides of the aisle, on further anti-fraud initiatives this year. In these trying economic times, cracking down on the fraud which has harmed so many hard-working Americans, and protecting hard-earned taxpayer dollars, is more important than ever.

At today’s hearing, we will learn more about recent historic success in anti-fraud efforts.  In the last fiscal year alone, the Department of Justice recovered well over $6 billion through fines, penalties, and recoveries from fraud cases.  The sums are staggering.  The government recovered $4 billion in taxpayer cases in health care fraud cases alone last year alone, the most of any year in history.  In the last same period, the Criminal Division obtained $3.4 billion in judgments and settlements.  Since January 2009, the Department has recovered $6.8 billion of taxpayer dollars in False Claims Act cases, far more than any other two-year period. 

The recovery of these vast sums of taxpayer money demonstrates that investment in fraud enforcement pays for itself many times over.  We must ensure that the Department of Justice continues to have the resources it needs to support anti-fraud efforts.  Far from adding to deficits, investment in fraud enforcement returns money to taxpayers.  If we can reinvest a small amount of these recoveries back into fraud enforcement, we will have an even better deal for Americans – greater recovery of taxpayer funds without any new spending of taxpayer money.

In addition to recovering billions of dollars in penalties and fines, the Department of Justice must continue to focus on holding individuals accountable for their fraud crimes.  The Fraud Enforcement and Recovery Act and the other key anti-fraud provisions passed in the last Congress sought also to ensure that those who commit fraud go to prison.  These provisions, and aggressive enforcement efforts by the Justice Department, are yielding results.

I was pleased to learn that the Financial Fraud Enforcement Task Force has secured charges against 343 criminal defendants and 189 civil defendants for fraud schemes that harmed more than 120,000 victims throughout the country in Operation Broken Trust.  The Health Care Fraud Prevention and Enforcement Action Team (HEAT) Strike Forces created by the Justice Department and Department of Health and Human Services have had similar success.  The HEAT Strike Forces have charged more than 500 defendants in 250 cases totaling approximately $1.1 billion in fraudulent billings to Medicare.  More than 280 defendants have been convicted, and nearly 205 have been sentenced to prison.  This prison time is critical as a deterrent.  Fines and monetary penalties alone fall short in protecting the public.  Too often, those who are willing to commit fraud view monetary penalties as just the cost of doing business.  This focus on ensuring real prison sentences must continue.

We will also learn today about ongoing challenges that law enforcement officers face in investigating and prosecuting fraud.  The FBI has recently more than doubled the number of agents investigating fraud and has created the National Mortgage Fraud Team, in part thanks to our legislation and increased appropriations. I am disturbed, though, by ongoing reports of fraud in the mortgage foreclosure process, where so many Americans are finding themselves in this challenging economy.  I hope to learn today whether the Justice Department needs new tools and greater resources to root out those responsible for fraud crimes, including mortgage fraud.

President Obama and Attorney General Holder have enthusiastically supported legislative initiatives to bolster fraud enforcement, and have spearheaded important new efforts on mortgage fraud, health care fraud, and financial fraud.  The administration’s commitment to fraud enforcement is exemplified by our witnesses here today.

We welcome back to the committee Assistant Attorneys General Lanny Breuer and Tony West.  As head of the Criminal Division, Mr. Breuer oversees nearly 600 attorneys who prosecute federal criminal cases across the country.  The fraud section of the Criminal Division had a banner year, imposing the most criminal penalties in Foreign Corrupt Practices Act cases in any single 12 month period, over $1 billion, and I look forward to hearing more about this success.

As the head of the Civil Division, Mr. West has bolstered affirmative civil enforcement efforts in areas such as health care fraud and mortgage fraud to recover taxpayer money lost to fraud and abuse. 

Major fraud cases take time to investigate and prosecute.  The renewed push we have seen from this administration and from Congress will continue to yield significant results.  But we must continue to give law enforcement agencies the tools and resources necessary to root out fraud so that they can continue to recoup the loss to taxpayers.   Everyday, taxpaying Americans deserve to know that their Government is doing all it can to hold responsible those who committed fraud, and to prevent future fraud, particularly with so much taxpayer money at risk. 

Americans are worried about their budgets at home.  We need to protect their investment in their government.  Fighting fraud and protecting taxpayer dollars are issues Democrats and Republicans have worked together to address in the past, and in these difficult economic times, we need to continue in that spirit of bipartisanship.  I look forward to working with Senator Grassley, the Administration and members of both political parties to bolster our nation’s capacity to enforce effective anti-fraud laws. 

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